The Impact Of COVID-19 On The IT Sector

 

When the whole world is shut down due to the COVID-19 outbreak, then how will the IT sector be left behind? 

The outbreak of COVID-19 has significantly impacted the majority of the IT sector. The lockdown is necessary to save the life of billions of people. But the impact of lockdown due to the virus outbreak may leave a significant impact on the IT sector for years. 

According to a recent statistical report, the COVID-19 is going to put an adverse impact of around $180-billion only on the Indian IT sector. 

And this impact is even worse than the effects of the GFC crisis of 2008. 

Europe and the USA account for two-thirds of the IT exports of India. But both of these countries are adversely affected by the outbreak of the COVID-19 virus. 

These statistics are disturbing as this virus outbreak is predicted to leave an adverse impact on the world economy for a long time. 

Earlier it was confirmed with the statement of Accenture, which states that the FY20 guidance had been dropped by 3-6% in the local currency in March. But after that, the major IT sector investors declined their spending in the IT sector as they may face significant losses. 

The IT sector is the most reliable pipeline in the world. But this pandemic situation of the outbreak of the COVID-19 virus has broken this pipeline of the world and left the IT sectors on the edges of major downfall. 

However, to have some clear views on the impact of the IT sector due to COVID-19, check out these figures about how this outbreak of pandemic COVID-19 has put pressure on the IT sector.

The GFC Redux vs. Pandemic COVID-19 

The pandemic COVID-19 outbreak is to be expected worse than the GFC crisis. 

The whole world is shut down, and it is going to harm a GDP of around $8 trillion. The entire Indian IT sectors are going to be hit hard by this outbreak. However, this impact of the COVID-19 outbreak is even worse than the GFC fall in 2008. 

“And the loss of the economy due to the COVID-19 affects the major spending on the IT by the superior clients.” But it is really early to know the exact impact of the COVID-19 outbreak on the IT sector, especially Indian IT sectors. 

The current condition is unstable as no one knows how long it will take to stop this pandemic outbreak and when the sector will run again. 

It is also clear from the FY21 that this year is going to be challenging for the Indian IT sector to set new budgets. 

As per the adverse marketing conditions, the relative stock of significant IT companies like HCL and Infosys technologies will go down until the global cases of COVID-19 are going to shut off. 

What we had during the 2008 and 2009 crisis is just a demo of what we are getting with the COVID-19 outbreak. This is much deeper, wider, and steeper than the 2008 conditions. 

Significant Decline in the IT Spending by the Clients 

In short, 2020 is the hit year where the IT sector's clients witness a massive decline. By the time, the IT companies and the clients have started declining their major IT spending due to the pandemic condition. 

When we talk about the Indian IT sectors, then it is impacting negatively on the major companies of IT's. 

The virus outbreak hit the economy in a much broader sense to several IT sectors. 

But to the positive side, the critical IT business sectors such as e-commerce, banking sectors, and call centers will keep on continuing their growth. They may witness some flow in meeting with short demands. 

However, the projects from other IT sectors may have a pause until the clearance of the COVID-19 from the world. Both the supply of goods and their demand has been affected. 

Impact on Volatile IT Sectors 

According to Boz Hristov, the senior-most services analyst, the most exposed volatile sectors of IT, such as manufacturing, industrial, retails, and travel, are also facing the impact of this challenging period.

Moreover, some major financial sectors, especially capital markets, will face the drop-down due to this outbreak. This will be going to put high pressure on the Indian economic vendors that depend on the IT sectors. 

The volatile sector will face the biggest fall off due to the outbreak of COVID-19 and it will be quite challenging to set back in the same position. 

Rapid Decline in the Supply of Goods 

The IT industrial sector of India is the most significant supply chain in the world. However, the tech industry is facing the shutdown of the supply of goods like hardware and other things. This will leave an impact on the industry. 

Also, the global supply chain faces the challenge and shares a grim of around $4 trillion. The data points show that it is going to be more adverse than the 2008 GFC crisis. 

But here we have to wait a bit more to understand the exact fall down of the supply of goods and services of the significant IT sectors. For this, we will keep on assessing the impact on the biggest industrial sectors over the next few months. 

However, most of the IT companies will face off how they will stand in June and July. The IT sector will keep on pushing the limit to cop-up with the adverse effect of the lockdown in the world due to the outbreak of COVID-19. 

Final Thoughts 

The life-threatening outbreak of COVID-19 harmed the major industrial sectors, including IT. But the worst thing is it will keep on hitting the industry until or unless the virus vanishes from the world. 

For now, it left a significant impact on the major IT spending, declining in the supply, and dropping down the economic growth by 2-3%. If the virus impact does not stop in the next three to four months, then the conditions would be even worse for the IT sectors than now.